DirecTV acquires EchoStar’s video business

As has been rumored, DirecTV and EchoStar have entered into a definitive agreement under which DIRECTV will acquire EchoStar’s DISH DBS video distribution business, including DISH TV and Sling TV, through a debt exchange transaction.

“DirecTV operates in a highly competitive video distribution industry,” said Bill Morrow, CEO of DirecTV. “We expect that with greater scale, the combined DirecTV and DISH will be better able to work with programmers to realize our vision for the future of television, which is to aggregate, curate and distribute content tailored to customers’ interests and be better able to achieve operational efficiencies, creating while providing value to customers through additional investments.”

“This agreement is in the best interest of EchoStar’s customers, shareholders, bondholders, employees and partners,” said Hamid Akhavan, president and CEO of EchoStar. “With an improved financial profile, we will be in a better position to continue to enhance and deploy our nationwide 5G Open RAN wireless network. This will give U.S. wireless consumers more choice and help drive innovation faster. We expect bondholders of DISH and EchoStar to benefit from having two companies with stronger financial profiles and more balanced capital structures.

“DirecTV was founded 30 years ago to provide consumers with greater video content choices compared to incumbent cable operators, and the company’s acquisition of DISH TV and Sling TV allows it to once again provide greater choice and better value in an industry currently dominated by large streaming platforms streaming. ” added David Trujillo and John Flynn, partners at TPG. “Our ability to complete these transactions, coupled with our proposal to acquire AT&T’s 70% stake in DirecTV, announced earlier today, exemplifies the unique capabilities of the TPG platform and our experienced, sector-focused investment approach as we support DirecTV’s continued investment in next-generation video service innovations that consumers use.

Upon closing of the transaction, DirecTV expects leverage to be just over 2.0x and plans to reduce leverage to below 2.0x within 12 months, consistent with its financing policy of 1.5-2.0x on a pro forma basis. As a result, DirecTV will have one of the best leverage profiles in the pay TV industry. DirecTV estimates that the combination of DirecTV and DISH has the potential to generate cost synergies of at least $1 billion annually. These synergies are expected to be achieved by the third anniversary of closure, assuming closure to occur in late 2025.

Finally, EchoStar will reduce its total consolidated debt (excluding finance leases and other notes payable) by approximately $11.7 billion and reduce its consolidated refinancing needs through 2026 by approximately $6.7 billion (excluding finance leases and other payable bills of exchange). The transaction, in conjunction with the exchange offer, will also terminate all inter-company obligations between DISH Network and DISH DBS and enable EchoStar to fully unbundle the 3.45-3.55 GHz spectrum, unlocking strategic and operational flexibility.

Under the terms of the purchase agreement, DirecTV will acquire EchoStar’s video distribution business in exchange for a nominal consideration of $1 plus the assumption of DISH DBS’s net debt. DISH Network will also benefit from the release of a significant amount of intercompany receivables, including spectrum, but will have limited access under the agreement to the cash flows generated by its operations from inception to closing. DISH DBS and DirecTV have commenced an exchange offering of five different series of DISH DBS Notes with an aggregate principal amount of approximately $9.75 billion, including obtaining certain consents from holders of such Notes to facilitate the acquisition.

The transaction is subject to various closing conditions, including, among other things, the required number of outstanding DISH DBS notes subject to the exchange offer, completion of the reorganization prior to closing and receipt of required regulatory approvals.

Additionally, TPG Angelo Gordon and certain of its co-investors, as well as DirecTV, have provided $2.5 billion in financing to fully refinance DISH DBS’s debt due November 2024. Proceeds of the financing will be provided to DISH DBS via a secured intercompany loan to fully refinance repayment of DISH DBS debt in November 2024 and for general corporate purposes. The financing may be converted or refinanced into DirecTV debt upon closing of the acquisition.

“We have built our business to provide financial solutions tailored to individual needs. We are pleased to partner with DirecTV and DISH DBS on a transaction that adds value to all stakeholders,” said Ryan Mollett, Partner, and Michael Ginnings, Managing Director, TPG Angelo Gordon.

Following the closing of this transaction, DirecTV will continue to be led by Morrow, DirecTV’s chief executive officer, and Ray Carpenter, DirecTV’s chief financial officer. The combined company will be headquartered in El Segundo, California.

TPG also announced a definitive agreement under which TPG will acquire the remaining 70 percent of the shares of DirecTV it does not already own from AT&T. TPG will invest in DirecTV through TPG Capital, the company’s U.S. and European private equity platform. The transaction between TPG and AT&T is expected to close in the second half of 2025, subject to customary closing conditions. Completion of this transaction is not contingent upon DirecTV’s acquisition of DISH.